Yellen Concerned about Israel's Threats to Cut off Palestinian Banks

US Treasury Secretary Janet Yellen attends a press conference at the US Ambassador's residence in Beijing on April 8, 2024. (Photo by Pedro Pardo / AFP)
US Treasury Secretary Janet Yellen attends a press conference at the US Ambassador's residence in Beijing on April 8, 2024. (Photo by Pedro Pardo / AFP)
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Yellen Concerned about Israel's Threats to Cut off Palestinian Banks

US Treasury Secretary Janet Yellen attends a press conference at the US Ambassador's residence in Beijing on April 8, 2024. (Photo by Pedro Pardo / AFP)
US Treasury Secretary Janet Yellen attends a press conference at the US Ambassador's residence in Beijing on April 8, 2024. (Photo by Pedro Pardo / AFP)

US Treasury Secretary Janet Yellen said on Thursday she was concerned by a threat from Israel to cut off Palestinian banks from their Israeli correspondent banks, a move that would close a critical lifeline for the Palestinian economy.

Yellen told a news conference ahead of a G7 finance ministers meeting beginning on Friday that the US and its partners "need to do everything possible to increase humanitarian assistance to Palestinians in Gaza, to curtail violence in the West Bank, and to stabilize the West Bank's economy."

She said she would bring up the issue at the meeting of the Group of Seven industrial democracies in the lakeside resort town of Stresa in northern Italy. "I expect other countries to express concern about the impact of such a decision on the West Bank economy. I think this would have a very adverse effect also on Israel."

Israel's Finance Minister Belazel Smotrich has said he cannot renew a waiver that expires on July 1 which allows Israeli banks to process shekel payments for services and salaries tied to the Palestinian Authority, Reuters reported.

In a post on the X social media site reacting to Yellen's comments, Smotrich said he could not sign the waiver because Palestinians are still funding "terrorism" and Israeli banks can be sued for violating anti-terrorism financing laws.

"The financial system of the Palestinian Authority is infected with terrorism up to its neck," said Smotrich, a member of a far-right Israeli coalition partner that supports settlements in the West Bank. He called critics of the policy "hypocrites."

Yellen said it was important to keep open the Israeli-Palestinian correspondent banking relationships to allow battered economies in the West Bank and Gaza to function and help ensure security.

"These banking channels are critical for processing transactions that enable almost $8 billion a year in imports from Israel, including electricity, water, fuel, and food, as well as facilitating almost $2 billion a year in exports on which Palestinian livelihoods depend," Yellen said.

She added that Israel's withholding of revenues collected on behalf of the Palestinian authority also threatens the West Bank's economic stability.

"My team and I have also engaged directly with the Israeli government to urge action that would bolster the Palestinian economy and, I believe, Israel's own security," Yellen said.

Financial tensions between Israel and the US have risen over US sanctions imposed on Israeli settlers in the West Bank.



Hamas Response to Gaza Ceasefire Proposal ‘Consistent’ with Principles of US Plan, Leader Says

Palestinians attend Eid al-Adha prayer in Khan Younis town, southern Gaza strip, 16 June 2024. (EPA)
Palestinians attend Eid al-Adha prayer in Khan Younis town, southern Gaza strip, 16 June 2024. (EPA)
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Hamas Response to Gaza Ceasefire Proposal ‘Consistent’ with Principles of US Plan, Leader Says

Palestinians attend Eid al-Adha prayer in Khan Younis town, southern Gaza strip, 16 June 2024. (EPA)
Palestinians attend Eid al-Adha prayer in Khan Younis town, southern Gaza strip, 16 June 2024. (EPA)

Hamas' response to the latest Gaza ceasefire proposal is consistent with the principles put forward in US President Joe Biden's plan, the group's Qatar-based leader Ismail Haniyeh said in a televised speech on the occasion of the Islamic Eid al-Adha on Sunday.

"Hamas and the (Palestinian) groups are ready for a comprehensive deal which entails a ceasefire, withdrawal from the strip, the reconstruction of what was destroyed and a comprehensive swap deal," Haniyeh said, referring to the exchange of Israeli hostages for Palestinian prisoners.

On May 31, Biden laid out what he called a "three-phase" Israeli proposal that would include negotiations for a permanent ceasefire in Gaza as well as phased exchanges of Israeli hostages for Palestinian prisoners held in Israel.

Egypt and Qatar - which along with the United States have been mediating between Hamas and Israel - said on June 11 that they had received a response from the Palestinian groups to the US plan, without giving further details.

While Israel said Hamas rejected key elements of the US plan, a senior Hamas leader told Reuters that the changes the group requested were "not significant".